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Price staff outline health-insurance and workers' comp costs; open enrollment, high-deductible plan likely to become default
Summary
City finance staff briefed the council on employee health-insurance open enrollment, a likely shift toward a high-deductible plan, and a raised workers' compensation experience modifier that will increase premiums and the budgetary request.
City finance staff told the council that open enrollment for employee health benefits will begin later in the month and that current estimates show a notable increase in overall insurance costs for the coming fiscal year.
Staff said the city will run open enrollment, then report back with final participation numbers and a precise budget figure. In preliminary budget modeling, staff estimated roughly $1.56 million for medical insurance and said the city faces an increase of about $90,000 compared with the prior year based on current enrollment assumptions. Staff said open enrollment typically runs about a week and a half and that final plan elections will determine the precise dollar impact.
Staff also said the city’s workers’ compensation experience modifier (EMOD) was 1.47 for the coming budget cycle, compared with 0.89 previously, and that the EMOD drives additional premium costs. The finance presentation included a note that a higher EMOD will add roughly $21,000 in workers-compensation cost in the coming year compared with lower prior-year levels.
On plan design the finance director said the traditional (lower-deductible) medical plan may no longer be available next year and that the city may need to offer only the high-deductible option going forward, depending on enrollment and cost dynamics. Staff emphasized they do not yet have final plan elections and that council will see a final number with the budget adoption process.
Council direction and budget context: Staff asked the council to review the materials, call or meet about specific questions, and noted the insurance figures will be incorporated into the city’s upcoming budget work. The finance director also recommended caution about increasing the city’s 401(k) contribution in the same year given the insurance and wage pressures; she estimated an additional 401(k) contribution in the budget year would add about $48,000 to personnel costs based on current payroll figures.
Background: Staff said the city negotiated with carriers to spread prior high-cost claims over time and that the EMOD is calculated from rolling multi-year claims experience, which is why the city’s workers-comp premium increased despite a recent improvement in claims.
